Question

Wheeler’s Bike Company manufactures custom racing bicycles. The company uses a job order cost system to determine the cost of each bike. Estimated costs and expenses for the coming year follow

Answer 1

predetermined overhead rate: 14.51 dollars per labor hour

applied overhead at 18,500 hours: 268,435 dollars

Step-by-step explanation:

we distribute the expected overhead over the cost dirver. In this case direct labor hour:

cost driver: labor hours:

labor cost: 231,322 / 12.71 labor rate = 18,200 labor hours

expected overhead:

depreciaiton 53,500

supervisor 135,000

supplies 42,900

property tax 32,750

total overhead 264,150‬

overhead rate: 264,150 / 18,200 = 14,51373626373626 = 14.51/hr.

applied: 18,500 x 14.51 = 268.435‬